[February 04, 2014]Stimulus
money has been awash in our country. Billions of dollars have been
legislated by the United States Congress and signed by the president
to be released into our economy to "stimulate" economic growth. In
the wake of that enormous stimulus bill, the debate increased in
volume on both sides, either touting the effectiveness of the
stimulus money or denouncing it as ineffective for economic growth.
The other day I had a conversation over the Internet with a friend
here in my small town. It was about this same subject regarding how
government works. We talked about the money swirling around and
economic growth, but then brought it home to our own specific
My friend posed the question regarding his property taxes. In our
little town we have extremely high property taxes, so he asked, since
the value of his property had gone down since the recession has hit,
why his taxes wouldn't be reduced accordingly. It seemed like a
logical question since I know that mine had not been reduced either.
My friend's assertion was that he was now paying more for less
service. Of course he was correct in that we are paying more taxes
for less service.
In most cases, however, when a tax is levied, it is rare that it is
ever eliminated. It usually gets folded into the process and becomes
part of the base for the cost of the current services, even if those
services had been reduced by layoffs, as he had mentioned. The
process, however, rarely recognizes a return to the former levels.
So even though we pay more for less, if we do a callback to restore
those jobs that have been lost to bring the service up to the former
level, it will cost much more. It seems to always work that way when
government is involved.
Bureaucracy is the process he was looking for in explaining why this type of thing happens.
Case in point: When we went through economic hard times locally, our
school district eliminated several positions. Presumably that
eliminated some services because those positions were eliminated;
what the people in those positions were doing could no longer be
done. By cutting those services, did it mean that we solved the cash
shortfall issue? No, in fact the district countered that economic
stress by having a referendum to increase the tax. Even when it
passed and additional revenue was received, did it mean those
positions could be restored? Of course not, because the cost of
doing business by that time had leveled out with the addition of the
new referendum revenue for the same level of service. If history
ever serves as our teacher, in two years (or less) the district will
then advance the idea of yet another referendum to gather more tax
revenue that will bring us up to the same level of service we
received prior to the initial cut. That is how bureaucracy works.
Consider our educational model. Our little town has four school districts, and with its four
distinct school districts, it serves as an excellent example of
bureaucracy and how bureaucracies grow. Remember that the goal of the 14,000-plus population in this small town, and most other towns
across America, is to provide a good education for our children. But
the method in which we provided that was to grow four school
districts (plus at least two faith-based organization schools), each
with its own division of labor, recruitment of a stable, long-term
career, each with a leveling system that creates a hierarchy to
support the division of labor, and each with a linear growth that
focuses on supporting the individual organization. Within each
organization came specialization, and with it, requirements for more
resources. This process continues to grow, even if in the future the
My friend wrote back to me and indicated that I made a strong case
for the consolidation of districts to reduce or eliminate all of the
administrative and organizational overlap. He said my points sounded
very similar to a book he had just finished reading entitled
"Caught in the Middle" that presented the exact same arguments
regarding Midwest counties, states and universities that needlessly
compete against each other rather than working together toward
shared goals. Just another example of bureaucratic growth.
My friend continued: "Locally, I've understood the layoffs were due
primarily to belated state funding payments. Of course that led me
to consider what will happen if and when the state revenues are in
fact finally paid. If they never are paid, then I can understand the
defensive positions the districts have made. But, what will happen
when/if the state finally comes through and the money is paid to the
districts when budgets and positions have already been cut? Would it
be reasonable to assume they would reopen the teaching positions?"
He continued his thoughts: "My thought is that down the road there
will be positions opening up; maybe not as many as were closed, but
a reasonable percentage. On the other hand, urban school populations
have been declining for many years, and this just might have been the
much-needed and delayed correction."
Knowing a little bit about
bureaucracy, however, and knowing that most of our "organizational
behavior" is built up around the creation and growth of
bureaucracies, I explained a bit about the growth of government.
Again, his original comment focused on the
"process" used to
arrive at the value of property to calculate the person's share of
taxes. I maintain that the foundational process upon which all of
those processes rest is the advancement of a bureaucracy, no matter
which one it is.
Keep in mind that bureaucracies are like galaxies in the universe:
They are relatively independent of each other, yet interrelated;
they are fighting for independent survival and constantly growing,
but competing for the same space or resources as all the others; and
they are in the process of protecting their own, especially those in
the hierarchy that are closer to the top or at the center. Once
formed, the bureaucracy must consume resources just for survival; and
the larger it grows, the more resources it needs.
Another example from my small town illustrates the point: A few days
earlier my friend and I had read the account of the outgoing city
treasurer. In essence, the city treasurer publicly reported that for
the city and county to provide services, they need a certain amount of
money. The only place that money can come from is taxing the
citizens of the town and the county.
Some time before, I had
researched the population of my town and found that from the year
1900 to 2000, a 100-year span, the population in the town
did not change significantly. The town's population had remained
steady at around 15,500 for the past 100 years. The 10
years from 2000 to 2010, however, the town lost about a thousand
people. However, by examining the difference in the city government
over that 100-year period, one will find that the cost of
doing government business had increased exponentially. Although the
population had remained the same, and has now even lost population,
the local government and cost of maintaining that government had
Why do you suppose that is? Some will say
more complicated equipment (computer age) for firefighters,
policemen, sheriff's deputies; some will say a reassignment of the
division of labor. Likely both are right. The most significant
reason for the increase, however, was due to the growth of the
city's departments of services, employees, regulation enforcement,
school enhancements and other offshoots of those entities that
decided to create things like recreational services that all should
have a part in paying for, regardless of the frequency of their
personal use of such facilities.
Throughout history, governmental bureaucracies have always had more
power since they make and control the laws and the enforcement of
those laws. So, bureaucracy will grow simply for the sake of growth.
My friend's email asked about the taxes on
property and why they were not cheaper since the value of the house
had decreased during the recession. The answer is that it is not the rise and
fall of the value of the house that determines the taxes; it is the
requirement of need for resources to maintain the bureaucracy to
continue to allow its steady growth rate.
The thing we must remember, however, is that the bureaucracy does not
produce any product to generate independent resources; it only takes
from those who do produce and redistributes those resources to those
who have not produced it. So when the government bureaucracy uses
money to stimulate economic growth, much of that will be used to
maintain or grow the bureaucracy.
It only robs Peter to pay Paul; and Peter will eventually run out of
money after having been robbed so many times. Not to mention that
Peter will likely lose heart and simply reduce or eliminate his